Cramer: Overseas Investors Eye U.S. Opportunities

The market climbed about 70 points by midday Thursday despite bad news on both the inflation and housing fronts. It all makes sense as far as Cramer’s concerned.

He’s still positive that we bottomed July 15, when the Dow dipped below 11,000 for the first time in two years. The U.S. dollar, the financials, retail, any company exposed to commodities inflation – all these market elements found a floor. At the other end of the spectrum was anything in the Consumer Price Index. The costs of the CPI’s constituents all found a top.

That’s why the CPI number isn’t having much of an effect today. It’s a lagging indicator. It’s like looking at a bad accident through your rearview mirror, Cramer said. There’s no need to panic because the damage is in the past. As a result, financial and consumer companies and retailers can all rally. Commodities users like Clorox, Kellogg and Kimberly-Clark are turning up (Cramer likes them on this small pullback). Even Toll Brothers, whose CEO has been extremely bearish on the prospects for U.S. housing, has turned bullish.

Part of what’s happening is that investors overseas, in countries where the currency is weakening and housing is just starting to decline, are starting to look in the U.S. for places to put their money. It’s the same logic we applied to the CPI number. American’s problems look to be in the past. We’re coming out on the other side of our worst days. A lot of places elsewhere in the world have a lot more downside to come.

CNBC’s Bob Pisani, reporting from the floor of the New York Stock Exchange, agreed. He said peaking inflations was “the number-one argument” for Wednesday’s rally. The dollar is up, thanks at least in part to Goldman Sachs reversing its longtime bearish position on the greenback. Consumer discretionary stocks – even General Motors – are seeing gains. Macy’s is near a two-month high even though it just reported a less-than-stellar quarter. Homebuilders are showing strength. And oil won’t budget despite the troubles between Russia and Georgia.

“Some people are believing that the bottom is in,” Pisani said.

There are still plenty of short positions in both the financials and retail apparently. But any momentum change in the market and those shorts will have to cover “fairly quickly,” Pisani said, and that squeeze could push these stocks higher.

A lot of the money that was heavily invested in commodities is switching to technology, Scott Wapner reported from the Nasdaq. And rather than going to the top 10 stocks in that index, the investing is becoming more broad-based, he said. Amgen , Intel, Google, Amazon, Research in Motion – they’re all outperforming right now.